01 Apr 2021 Mortgage move jeopardizes opportunities for minorities
While it may not have received a lot of attention, there was a major announcement recently in real estate and banking that could have a substantial impact on homeownership for minorities and the community. working class.
United Wholesale Mortgage (UWM), a leading mortgage lender, has taken an aggressive decision by announce that this would no longer work with the brokers who work with the smaller Rocket Mortgage and Fairway Independent lenders. UWM opposes the direct-to-consumer sales models used by these companies.
In a Newsmax comment, Project 21 Co-chairman Horace Cooper calls this new policy “bizarre, anti-competitive – and unethical”. He also says it would “have a discriminatory impact”. In making this case, Horace writes:
Therefore, [brokers] will not be able to effectively purchase the rates and products of all lenders. Less choice for consumers will likely result in higher costs and rates and therefore less opportunity for homeownership.
Higher costs and interest rates are never a good idea, but this is especially true for the working class and minorities.
Horace notes that there are disparities – such as low incomes, credit problems, and a lack of overall wealth – that impact minority and working-class households. This narrows down options and increases the possibility that even those who qualify for loans risk foreclosure during an economic downturn because the best options were not available to them.
That being said, homeownership is not something to be avoided:
Homeownership has always been an important way for all Americans to accumulate wealth – in fact, at over $ 15 trillion, home equity represents 16% of total U.S. household wealth. . Homeownership not only reflects wealth creation, it is also associated with strong and stable communities.
In addition, homeownership corresponds to an improvement in the health of all household members, an increase in volunteering and a decrease in crime in the community as well as the development of dynamic and well-adapted families in the community. all.
This is what makes UWM’s decision so disturbing. Horace emphasizes that “[t]The timing of this decision could not be worse ”, given that developments in artificial intelligence could “Dramatically reduce racial and class disparities in mortgage lending.” He explains:
These technologies do a better job of matching applicants with lenders than traditional lending processes by being able to consider almost any loan option imaginable.
And this technology doesn’t require any reduction or lowering of underwriting requirements either.
UWM’s new policy threatens to be a barrier to affordable homeownership and “could drag the housing wedge [between rich and poor] even wider. Horace calls this an “anti-consumer policy”.
Opening up consumer choice to help find the best opportunities for a household’s particular needs is the most prudent strategy, and UWM’s new policy will have exactly the opposite effect. Horace advises:
With the right policies, the United States can return to the booming economy that lifts all boats – black, white and brown.
To read Horace’s full commentary – “Mortgage company’s demands will do more harm than good” – click here to go to the Newsmax site.